Rapid wage increases threaten growth
The increase in Vietnam’s minimum wage is outpacing its productivity growth, according to a new report from the Vietnam Institute for Economic and Policy Research (VEPR). The report found that the minimum wage-tolabour productivity ratio had increased from 25% in 2007 to 50% in 2015, undermining the country’s economic growth prospects.
The increase in the gap between labour costs and productivity has been far larger in Vietnam than in Indonesia and Thailand. VEPR’s president, Nguyen Duc Thanh, said the growing disparity would reduce investment and cut into company profits.